ICT_SLB
There are (obviously) differences between 6.04 and 7.0, but in neither type is a vertical rate of closure required in order to generate an RA.
Both versions have a "Positive RA Threshold" (for corrective RAs) and a "Preventative RA Threshold" (for preventative RAs). Both are assessed versus predicted vertical separation at predicted time of closest approach.
So in all cases you can get RAs, with both aircraft in level flight, and at a different altitude. It just has to be a difference of altitude of less than the threshold (which 500', in this example, would be.
A vertical rate of closure is not necessary. In fact, the aircraft could be vertically diverging and an RA could still be generated.
e.g. - high altitude. Preventative threshold 800', corrective say 700, RA alerting threshold 35 seconds (these figures from top of head but approx correct). Aircraft currently co altitude. A/C 1 in level flight. A/C 2 rate of climb 600 fpm. 35 seconds to closest point of approach - predicted vertical separation 350'. Result - Corrective RAs for both aircraft (if equipped).
Spitoon
Sorry to pick hairs, but thats 'altitude reporting' rather than 'Mode C'.
TCAS can not see Mode A only (it doesn't send mode A interrogations), but what people refer to as Mode A only transponders are actually Mode A and C without altitude reporting.
CPB